You have been terminated. Your company provides you with a termination letter indicating how much it will pay you. Is it enough? The letter says that the company will pay you what is required under the Employment Standards Act (ESA) in accordance with your employment contract. Great. The company will comply with the employment contract and the law, that is good enough. Right?
If the termination clause in your employment contract is not enforceable, you could be entitled to much more.
You have worked for the company for 10 years. Under the ESA, you are entitled to eight weeks’ notice of termination with an additional 10 weeks’ severance pay if the company has a payroll of at least $2.5 million or more. If the termination clause is not enforceable, you may be entitled to between nine and 12 months’ notice of termination, or pay instead of this notice. If you are earning $50,000 a year, the difference in termination pay could be as much as $40,000.
Is it Enforceable?
More and more decisions from Ontario courts are finding termination clauses not to be enforceable. In a decision released in late April 2015, the court found that the language used in the termination clause was ambiguous. It did not clearly explain what the employee was entitled to when terminated, even though it mentioned the ESA. That the language was not clear enough, hurt the company and helped the employee. The judge found that the termination clause was not valid.
A lawyer can help you evaluate the employment contract when you are offered a severance package, or before you even start the job. Both severance packages and employment contracts can be negotiated.
If you have been asked to sign an employment contract, or provided a severance package, and you want to speak with an employment lawyer with experience in this area, contact us at [email protected] or 1-888-640-1728 (toll free) or 647-204-8107 (within the GTA).
If you have lost your job and need temporary income support, do you know what to do? In Canada, you can apply for Employment Insurance (“EI”) for partial income replacement from the Federal government. To learn about the different types of EI and whether you would be...read more
If you are totally unable to work because of a medical disability are you entitled to receive termination pay? That is the question considered in this blog. Employees Who Do Not Have LTD Coverage Sometimes, an employer does not provide disability insurance and in this...read more
Employees with only a few years (or even months) of service tend to believe that they aren’t entitled to much notice or pay in lieu of notice upon termination. As we have written before, we have seen a trend of longer notice periods being awarded to employees in...read more